On 2011-06-30 18:13 , Michael Benveniste wrote:
On 6/30/2011 5:14 PM, Alan Browne wrote:

I didn't say end value, but end "state". To compare you have to bring
both cases to a close if not equal end state.

Read your own post. The phrase "end value" clearly appears. I'm
used to people misquoting others, but you're misquoting yourself.

My point of reference was this paragraph: "
Prove it. Give me an actual case that shows end value better in a lease
vs. an outright purchase for a car at a given price. Don't forget all
the T&C's and the end states."

I was referring to the last sentence obviously.

In the end you bailed on the car because it was damaged goods and you
had a perception of lower value. That was accidental serendipity.

No, it was a real and foreseeable risk. In effect, Nissan Motor
Acceptance Corporation was insuring me against that risk by granting
me the option at the end of the lease.

It's always the option on a lease. That's the point, you don't own it
so you can walk away from it. But it is not something one computes as a
likely event unless one is a really bad driver or statistically unfortunate.

Note that I would have been slightly better off even without the
accident. And it wasn't just _my_ perception of lower value, it's the
market's as well. Major accidents show up in histories such as those
sold by CarFax.

I'd bet the vast majority of people who lease personal vehicles do it
because they do not have much (or any) cash to put down but are willing
to pay a fixed amount every month. They do not make a financial analysis
of any deep kind.

Their loss. It ain't exactly deep -- you plug the following into your
business calculator or spreadsheet.

-- The price of the car plus the additional fees you're paying.
-- The lease amount.
-- The end price you'll have to pay.
-- The term of the lease.

You then set the annuity flag and let the calculator or spreadsheet
compute the effective interest rate of the lease. If it's less than
your effective finance rate (self-financed or not), the lease is a
better deal. It was in my case.

If it's close, you have to decide if the option to return the
car is worth the difference. If it's not close, and it often isn't,
you don't lease.

If one leases a car for 3 years for $400 per month and returns it, he
has paid $14.4K and has nothing. And if he decides to buy it he pays a
premium over the used value at that point.

Wrong. He's had use of the car for three years at a lower cost and
at less risk than if he had bought it.

He has nothing in hand. 0. You conveniently deleted the other
paragraph of course which shows a much lower overall cost of using a
car. I guess that was inconvenient, huh?

Fact is, since a car loses so much value in the first few years, but
still provides reliable transportation for 10, one is a fool not to take
advantage of the low cost of the last 5 years.

If one only sees having a car for 3 or 5 years, that is another story,
and a fool of another kind: those who adore cars.

Leasing cars is a rubes game.

No, not understanding basic finance makes one a rube.

So you're a rube. Too bad.

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